Embraer and Boeing have approved to the terms of a strategic partnership.

The approved terms define the joint venture comprising the commercial aircraft and services operations of Embraer, in which Boeing will hold an 80 per cent ownership stake and Embraer will hold the remaining 20 per cent.

The transaction remains subject to approval by the government of Brazil, after which Embraer and Boeing intend to execute definitive transaction documents.

The closing of the transaction will then be subject to shareholder and regulatory approvals and customary closing conditions.

Under the terms of the proposed partnership, Boeing will acquire an 80 per cent ownership stake in the joint venture for $4.2 billion.

The partnership is expected to be neutral to Boeing’s earnings per share in 2020 and accretive thereafter.

Estimated annual pre-tax cost synergies of approximately $150 million are anticipated by the third year of operations.

Once the transaction has closed, the commercial aviation joint venture will be led by Brazil-based management, including a president and chief executive officer.

Boeing will have operational and management control of the new company, which will report directly to Dennis Muilenburg, Boeing chairman, president and chief executive officer.

Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil.

“Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year,” said Muilenburg.

The companies have also agreed to the terms of another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390.

Under the terms of this proposed partnership, Embraer will own a 51 per cent stake in the joint venture, with Boeing owning the remaining 49 per cent.

“We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole.

“This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy,” said Paulo Cesar de Souza e Silva, Embraer president and chief executive officer.